Supply and Licensing Agreement
Between
Quatech, Inc. and
Socket Mobile, Inc.
This Agreement,
effective as of September 30, 2009 (“Effective
Date”), is made and entered into by and between QuaTech,
Inc., (“QUATECH”), an Ohio Corporation with its
principal place of business at 5675 Hudson Industrial Parkway,
Hudson, Ohio 44236 and Socket Mobile, Inc. (“SOCKET”),
a Delaware Corporation, having its principal place of business at
39700 Eureka Drive, Newark, California 94560, collectively
hereafter referred to as the “Parties”. QUATECH is a
wholly owned subsidiary of DPAC Technologies Corp., a California
Corporation, located at 5675 Hudson Industrial Parkway, Hudson,
Ohio 44236.
WHEREAS SOCKET
is selling to QUATECH the designs, engineering specifications and
related documentation, software drivers and exclusive marketing
rights for its serial products under an Asset Purchase Agreement
dated September 30, 2009 (“Purchase
Agreement”);
WHEREAS the
sale of the serial products to QUATECH includes the right for
QUATECH to manufacture or have manufactured the serial products. In
connection with this right, QUATECH and SOCKET have agreed for
QUATECH to purchase SOCKET’s HIS3 chip from SOCKET under this
Agreement;
WHEREAS the
serial products being sold to QUATECH include SOCKET’S
Cordless Serial Adapter (“CSA”), QUATECH and SOCKET
have agreed the purchase of the CSA only includes the design
implementation currently being marketed and sold along with
SOCKET’s serial products and SOCKET shall license to QUATECH
hereunder SOCKET’S firmware implemented within the CSA that
provides Bluetooth functionality along with the CSA’s
Configuration Utilities.
NOW THEREFORE
in consideration for the mutual covenants and obligations set forth
herein, the parties hereby agree as follows:
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1.
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TERM
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The
term of this Agreement shall commence on the Effective Date and
shall terminate ten (10) years after such date, unless otherwise
terminated or canceled by either party as provided herein. This
Agreement shall automatically renew for additional one
(1) year terms unless one of the Parties notifies the other in
writing that it does not desire to renew the Agreement at least
sixty (60) days prior to the expiration date.
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QUATECH and
SOCKET Supply Agreement
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2.
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PRODUCTS
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HIS3 Chip The HIS3 chip is an interface chip
owned and manufactured by SOCKET and used in SOCKET products
including its serial products as more fully described in
Appendix A. This Agreement enables QUATECH to purchase the
HIS3 Chip from Socket for use in all QUATECH products (including
but not limited to the CSA)(“QUATECH
Products”).
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Socket Bluetooth BlueLab Application
Code and Configurator Utilities (“Software”)
. The Bluetooth BlueLab
Application Code is the Bluetooth firmware that runs embedded
within the CSA. The Configurator Utilities are used on a desktop or
notebook computer to configure the BlueLab Application Code
firmware when the CSA is plugged into a desktop or notebook. The
Software is described in more detail in Appendix B. This
Agreement licenses QUATECH to distribute this Software with the CSA
purchased under the Purchase Agreement.
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CSA Product . A limited quantity of the Cordless
Serial Adapter product is available due to the end of life status
of the BC02 Bluetooth chip designed into this product. SOCKET has
manufactured and holds in its inventory approximately 1,700 CSA
units. SOCKET agrees to hold these units for purchase by QUATECH,
and QUATECH agrees to purchase these units no later than
March 31, 2010 at SOCKET’s cost of $35.24 per unit. In
addition, SOCKET has in its inventory approximately 2,100 BC02
modules at a cost of $15.65 per unit which have been removed from
SOCKET’s price lists as an end of life product. These modules
represent the likely last available supply that could be used to
build additional CSA products. QUATECH agrees to advise SOCKET no
later than November 30, 2009 whether QUATECH will commit to a)
purchase some or all of these modules or b) instruct SOCKET to
build additional CSA products with these modules that QUATECH will
commit to purchase and which SOCKET agrees to build if so ordered
by QUATECH. After November 30, 2009 or upon being advised by
QUATECH that some or all of the BCO2 modules are not needed, SOCKET
has the right to dispose of any BC02 modules not needed by
QUATECH.
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3.
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SOFTWARE AND TEMPORARY LICENSE OF
SOCKET MOBILE I/P
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License and Distribution
Rights .
QUATECH is granted a worldwide perpetual royalty free license to
use, display and distribute the Software and related technical and
user documentation in object code format with the CSA product
acquired under the Purchase Agreement. SOCKET shall supply QUATECH
with master copies of the Software (including source code of the
Configurator Utilities ) along with all technical and user
documentation that describes the use of the Software. QUATECH is
also granted a source code license for the Configurator Utilities
and the right to create derivative works of this product and its
documentation and to use, modify, display and distribute all such
derivative works. QUATECH shall provide SOCKET with a source code
copy and related documentation of all derivative works to enable
SOCKET to provide second level support for the CSA.
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Software Support and
Warranty. The
Software is supplied “as is”. Bug fixes that correct
conditions that keep the Software from operating in accordance with
its specifications shall be made by Socket upon request at no
charge to QUATECH. All other modifications if any requested by
QUATECH shall be made by SOCKET at SOCKET’S discretion at a
non-recurring engineering fee to be mutually agreed at the time of
such request based on fees common to the industry for software
development. SOCKET shall also provide QUATECH with second level
technical support in answering technical questions regarding the
Software.
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Socket Mobile Intellectual Property
(I/P) .
Socket Mobile I/P used by SOCKET on its serial products consists of
the name ‘Socket Mobile’ and the logo
‘Socket’. These marks have been used on labels, data
sheets, manuals, product packaging and on driver software. Certain
products being purchased by QUATECH may initially contain Socket
Mobile I/P. It is the intent of the parties that QUATECH will
update and remove Socket Mobile I/P and replace it with Quatech I/P
on data sheets, manuals, packaging and driver software and will
begin to affix a sticker to product labels or create new labels no
later than December 31, 2009. QUATECH is granted a
royalty-free license through December 31, 2009 to manufacture
and distribute purchased products containing Socket Mobile
I/P.
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QUATECH and
SOCKET Supply Agreement
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4.
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HIS3 CHIP
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Right to incorporate the chip into
QUATECH Products . QUATECH is granted the right to
use the HIS3 chip in all QUATECH Products. The HIS3 chip may not be
sold as a stand-alone chip without the express written permission
of SOCKET.
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Technical Support
. QUATECH shall provide
first level support to its customers for its serial products
containing the HIS3 chip. SOCKET shall provide second level support
and training services to QUATECH for the HIS3 chip Monday through
Friday during SOCKET’s normal business hours.
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Escrow of HIS3 Engineering
specification documentation . SOCKET shall arrange to place and
keep current the most recent engineering drawings and
specifications for its HIS3 chip as defined in the Escrow Service
Agreement to be mutually agreed between the parties. The escrow
shall be established under a Master Beneficiary Three-Party Escrow
Service Agreement between QUATECH, SOCKET and Iron Mountain
Intellectual Property Management, Inc. , a copy of which is
attached hereto as Appendix C (hereafter referred to as the
“Escrow Agreement”). The Escrow Agreement shall provide
for the release of the engineering drawings and specifications with
a license to manufacture and sell the HIS3 chip for use in QUATECH
Products in the event that SOCKET becomes insolvent or otherwise
declares bankruptcy, in the event SOCKET breaches this Agreement or
in the event SOCKET fails to function as a going concern or to
operate in the ordinary course, each as more fully described in the
Escrow Agreement.
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Warranty of the HIS3 Chip
. SOCKET shall warrant
the HIS3 chip to perform in accordance with its specifications for
a period of fifteen months from date of receipt by QUATECH in
accordance with its normal warranty policy as specified in
Appendix D.
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Sale to Government
. If QUATECH sells its
QUATECH Products containing the HIS3 chip to the United States
Federal Government either directly or indirectly, or through the
General Services Administration (“GSA”), California
Multiple Award Schedule (“CMAS”), or other government
multiple award schedule contracts, SOCKET agrees to provide any
representations or certifications to QUATECH or any of
QUATECH’S U.S. Federal Government end-users as may be
required, including but not limited to a Letter of Supply required
to add the QUATECH Products to QUATECH’s GSA Schedule. SOCKET
agrees to furnish the HIS3 chips needed by QUATECH to fulfill any
GSA, CMAS, or other government multiple award schedule contracts or
similar contract obligations under any schedule contract, and to
accept any government flow-down provisions, including but not
limited to, the United States Government Federal Acquisition
Regulations (“FARs”) and its supplements, Defense FARs,
or NASA FARs, whether for resale or internal use.
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QUATECH and
SOCKET Supply Agreement
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5.
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HIS3 CHIP ORDERS/RESCHEDULE
RIGHTS
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QUATECH shall order HIS3 chips by
issuing and delivering to SOCKET written purchase orders
(“Purchase Orders”). QUATECH shall order a
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